Post Election Merger And Acquisition Activity Should Be Strong

By Generational Equity


One common issue that impacts both buyers and sellers of businesses is uncertainty. Not knowing where the economy is heading can put the brakes on deals harder than most other factors. Over the past several months, pundits and industry experts have noted that the pace of deal making has slowed, largely because of the uncertainty associated with both the presidential election and the correlated impact of the composition of the Senate.

No matter where your politics are on the color spectrum between red and blue, the reality is we now know what the playing field will look like. The surprising events on November 8 will have a resonating impact on deal making, according to an article in the Daily Deal last month. Entitled “Pickup in M&A Predicted by Dealmakers, Following Republican Sweep,” it focused on a series of interviews conducted a few days after the election. Here are some quick opinions on the topic:

There’s going to be “a pickup in M&A,” says Jim Freedman, chairman, Intrepid Investment Bankers LLC, reflecting on the Republican party’s winning the White House and both houses of Congress in the U.S. election. “The general consensus is that there will be a reduction in taxes," Freedman continues. "There will be a reduction in regulation. There will be more of a pro-business philosophy. I think those are all good things for the M&A industry. I’m pretty bullish on what this means for the M&A business.”

“If people conclude, in the next several months, that the transition will foster some policies that will cause some economic activity, then we may see more M&A activity,” says Geoffrey Rehnert, co-CEO, Audax Group.

“My prediction is that it is going to accelerate M&A activity,” says David Bonrouhi, managing director, Calabasas Capital, referring to the election outcome. “Business owners are going to want to get deals done before any new initiatives get passed and slow things down.”

Although it may be too early to predict the direct impact of the election on all M&A activity, one thing is clear: the uncertainty of who will be leading the country, and setting key policies to grow the economy, is now gone.

If you have been delaying your exit plans because of uncertainty regarding the business direction of the country, your wait should now be over. Based on early indicators, it is prudent to expect that quite a few policies designed to foster growth and stimulate the economy will be implemented.

Owners of privately held companies now need to consider this and realize that hundreds (if not thousands) of baby boomer business owners are most likely doing the same mental calculations. Given this reality, it is vital to enter the market sooner rather than later, since quite a few business owners are probably going to wait and possibly face a glut of business for sale in the market at the same time, which typically depresses valuations.

If you are interested in learning more about current M&A trends and how you can eventually exit your business and achieve your hard-earned financial security, I invite you to attend a Generational Equity exit planning seminar. We hold these throughout North America and they are designed to provide business owners with a wealth of information on the entire process of finding buyers/investors for their businesses. Here is what a few business owners have told us about attending one of our seminars:

If you would like to find out more about our services and/or our educational process, please fill out a contact form or call us at 972-232-1121 and ask to speak with one of our senior business advisors, or visit our website and examine the locations we will be visiting in the next few months:

The key for you will be deciding what kind of business owner you want to be: The type that PLANS to sell or the kind that HAS to sell. Tis far better to be in the first group and take advantage of a possible M&A seller’s market!

By Carl Doerksen, Director of Corporate Development at Generational Equity.

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